Themis Medicare (NSE:THEMISMED) Is Increasing Its Dividend To ₹5.00

Themis Medicare Limited's (NSE:THEMISMED) dividend will be increasing from last year's payment of the same period to ₹5.00 on 19th of October. Despite this raise, the dividend yield of 0.6% is only a modest boost to shareholder returns.

View our latest analysis for Themis Medicare

Themis Medicare's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Themis Medicare's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 32.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 5.9% by next year, which we think can be pretty sustainable going forward.

Themis Medicare Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The annual payment during the last 2 years was ₹1.75 in 2020, and the most recent fiscal year payment was ₹5.00. This implies that the company grew its distributions at a yearly rate of about 69% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Themis Medicare has impressed us by growing EPS at 33% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Themis Medicare's Dividend

Overall, a dividend increase is always good, and we think that Themis Medicare is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Themis Medicare that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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